The ATO has issued a draft legislative determination to raise the cents per kilometre deduction rate for motor vehicle expenses to 72 cents for the income year starting 1 July 2020.
The rate last changed in 2018, which saw the rate rise to 68 cents.
The cents per kilometre method currently allows taxpayers to claim up to a maximum of 5,000 business kilometres per car per year, without requiring written evidence.
Work-related car expenses have been a focal point for the Tax Office in recent years, with 3.6 million taxpayers claiming more than $7.2 billion in 2017–18.
According to the ATO, one in five claims is exactly at the 5,000km limit, with the agency’s analytics picking up unusual claims by comparing taxpayer claims with others earning similar amounts in similar jobs.
“While some claims of exactly 5,000km are legitimate, we’ve found many people are unable to show how they’ve arrived at this amount, and as a result, they’ve had their claim reduced or disallowed in full,” said ATO assistant commissioner Karen Foat last year.
“We are still concerned that some taxpayers aren’t getting the message that overclaiming will be detected, and if it is deliberate, penalties will apply.
“While some people do make legitimate mistakes, we are concerned that many people are deliberately making dodgy claims in order to get a bigger refund. We see taxpayers claiming for things like private trips, trips they didn’t make and car expenses their employer paid for or reimbursed them for.”
The ATO’s draft determination is currently open for consultation and will close on 14 April.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.